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Saturday, December 27, 2014

Yes, The Airlines WANT You To Suffer-- And Make Sure You Do

Airlines are making tremendous profits by selling their customers misery

Friday, The New Yorker ran a piece by Tim Wu, Why Airlines Want To Make You Suffer. It's not a comedy piece. Like us, he was disgusted with Jet Blue going over to the anti-customer dark side, lamenting now the airline had previously "distinguished itself by providing decent, fee-free service for everyone, an approach that seemed to be working: passengers liked the airline, and it made a consistent profit. Wall Street analysts, however, accused JetBlue of being “overly brand-conscious and customer-focussed.” In November, the airline, under new management, announced that it would follow United, Delta, and the other major carriers by cramming more seats into economy, shrinking leg room, and charging a range of new fees for things like bags and WiFi."

It seems that the money was just too good to resist. In 2013, the major airlines combined made about $31.5 billion in income from fees, as well as other ancillaries, such as redeeming credit-card points. United pulled in more than $5.7 billion in fees and other ancillary income in 2013, while Delta scored more than $2.5 billion. That’s income derived in large part from services, such as baggage carriage, that were once included in ticket prices. Today, as anyone who travels knows well, you can pay fees ranging from forty dollars to three hundred dollars for things like boarding in a “fast lane,” sitting in slightly better economy-class seats, bringing along the family dog, or sending an unaccompanied minor on a plane. Loyal fliers, or people willing to pay a giant annual fee, can avoid some of these charges; others are unavoidable....If fees are great for airlines, what about for us? Does it make any difference if an airline collects its cash in fees as opposed to through ticket sales? The airlines, and some economists, argue that the rise of the fee model is good for travellers. You only pay for what you want, and you can therefore save money if you, for instance, don’t mind sitting in middle seats in the back, waiting in line to board, or bringing your own food. That’s why American Airlines calls its fees program “Your Choice” and suggests that it makes the “travel experience even more convenient, cost-effective, flexible and personalized.”But the fee model comes with systematic costs that are not immediately obvious. Here’s the thing: in order for fees to work, there needs be something worth paying to avoid. That necessitates, at some level, a strategy that can be described as “calculated misery.” Basic service, without fees, must be sufficiently degraded in order to make people want to pay to escape it. And that’s where the suffering begins.The necessity of degrading basic service provides a partial explanation for the fact that, in the past decade, the major airlines have done what they can to make flying basic economy, particularly on longer flights, an intolerable experience. For one thing, as the Wall Street Journal has documented, airlines have crammed more seats into the basic economy section of the airplane, even on long-haul flights. The seats, meanwhile, have gotten smaller-- they are narrower and set closer together. Bill McGee, a contributing editor to Consumer Reports who worked in the airline industry for many years, studied seat sizes and summarized his findings this way: “The roomiest economy seats you can book on the nation’s four largest airlines are narrower than the tightest economy seats offered in the 1990s.”Boarding for non-élite flyers has also become a miserable experience. There are far more efficient ways to load planes than the current back-to-front method, which is actually slower than random boarding. The process takes longer still thanks to the practice of letting flyers with status board out of turn and thanks to luggage charges, which compel fee-avoiders to cram their bags into overhead compartments. Airlines lack a real incentive to fundamentally improve boarding for everyone-- by, for example, investing in methods such as filling both ends of an airplane at once. It would make life better and also defeat the status racket."And Tim was just talking about America, where airlines at least make some token gesture to concepts of vestigial democracy. Imagine what it's like in a traditionally authoritarian or feudal society like South Korea. In fact, don't imagine. Earlier today DWT carried an apocryphal post about KAL and feudalism in the 21st Centuries skies.

Too big to fire

My favorite part of the on-going Korean Air scandal is how it exposed the relationship between the plutocracy and the working class. First, meet Cho Hyun-ah, an heiress-- daughter of Korean Air chairman Cho Yang-ho. Part of her patrimony, apparently is an executive vice presidency at the airline-- and an attitude towards the little people that would make Leona Helmsley blush. As for her very own little people, Cho flew to Hawaii last May to give birth to twin sons so that they would have U.S. citizenship-- something wealthy South Koreans like to do... just in case something goes wrong (and so that they kids don't have to serve in the Korean military).OK, first the facts in the more recent scandal that has led to Cho be fired by her embarrassed father. She was flying-- first class, of course-- from JFK back to Korea on December 5. She flipped out when a flight attendant handed her macadamia nuts in a bag instead of in a bowl. People in first class get their macadamias in bowls, while the peasants get their bags of peanuts in bags. She went nuts! She summoned the senior steward in charge and demanded an explanation, which didn't satisfy her. So she ordered the plane back to the gate so the flight attendant could be thrown off the plane. And the plane's captain obeyed! Ah... the power and arrogance of Korea's chaebol (family-run mega-conglomerates). Cho's family is especially hated in Korea, and Hanjin, the parent company of Korean Air, got its start serving the U.S. military in the 1940s. Several years ago, Cho's brother, Won-Tae Cho, another spoiled brat and another executive vice-president of the airline and other Hanjin subsidiaries, was investigated by police for shoving an elderly woman who confronted him about his reckless driving. Earlier the patriarch himself, who is a well-known crook, was convicted, along with his own father brother, of tax evasion.

The abused flight attendant who was attacked and berated by an airline executive when he failed to serve her nuts in a bowl on a flight from New York to South Korea is sharing his story.Screaming Cho Hyun-ah, a senior vice-president at the airline and daughter of the airline's chairman, angrily demanded the removal of the crew member, Park Chang-jin, from the flight when he gave her macadamia nuts in a bag.She then forced the Incheon-bound flight to taxi back to the terminal at New York's JFK Airport to kick the junior flight attendant off the plane.Now, Chang-jin has revealed that several officials from Korean Air asked him to deny the incident ever happened.'People who haven't experienced will not understand that feeling of being insulted and shamed,' Chang-jin told a South Korean television station on Friday.He said after being berated by Hyun-ah, he and a fellow flight attendant actually dropped to their knees in front of the woman begging for forgiveness, this as she 'poked the back of his hand with a corner of the flight manual book several times.'Because she is the daughter of the chairman, he says he had no choice but to follow her orders, returning the plane and deboarding, taking a separate flight home.
When he got home however, 'five to six officials from Korean Air came to visit his home every day and asked him to give a false account to authorities of what happened.'What's more, they 'asked him to tell investigators that Cho did not use abusive language and that he voluntarily got off the plane.'

There was talk about Cho being arrested and the family firm did all it could to paper over the whole incident and contain the damage. The Straits Times was eager to give their side of the story.

While it is easy to write her off as another hoity-toity power-abusing chaebol heiress, the hotel management-trained Ms Cho undertook initiatives to improve Korean Air, which she joined in 1999.Under her charge, the airline had a major image overhaul, complete with new uniforms, redesigned cabin interiors and improved inflight service and duty-free offerings. In 2005, it achieved US$158 million (S$207 million) in duty-free sales, reportedly the highest-ever by any airline at that time.This figure is expected to hit US$190 million this year, according to travel retail magazine The Moodie Report, which described Ms Cho as a "highly driven individual by her own admission" in a 2006 interview.Ms Cho was also credited with revamping the inflight magazine and giving it a much-needed feminine touch. She also spent three years convincing La Mer to join the airline's duty-free offerings-- a first for the luxury skincare brand."I try to be an ambassador to introduce new and great brands to Koreans who travel," she told Moodie Report.

Cho hasn't been arrested yet but... that could actually happen. A transport ministry official has been arrested for helping with the family coverup. I'm sure he assumed that was part of his job. He's in jail now. The relationship between government functionaries and the families that run the chaebols is, at best, unhealthy and the Cho incident is an opportunity for reform groups to shed light on the sleaze that permeates the whole system.

A local civic group asked the prosecution Friday to look into suspicions that government officials got free upgrades from the country's top airline, Korean Air Lines Co., which is at the center of controversy over an air-rage incident....The civic group's move came after allegations surfaced that several ranking transportation ministry officials were bumped up to business class regularly for free."Such allegations could be interpreted as bribery," People's Solidarity for Participatory Democracy said in a press release, adding that Korean Air executives suspected of giving such privileges to ministry officials could face breach of trust charges.The ministry said it will launch an internal inspection into the mounting allegations and will take appropriate disciplinary measures against those who received free upgrades.